Credit Card Processing Fees Explained (How to Pay Less in 2026)

If you run a business and accept credit cards, you are paying processing fees every single day.

But here’s the reality:

Most business owners don’t fully understand what they’re paying — and that confusion is exactly why they overpay.

In this guide, you’ll learn:

• What credit card processing fees actually are

• Where hidden fees come from

• How processors make money

• How to lower your rates immediately

• What to look for in a merchant services provider

What Are Credit Card Processing Fees?

Every time a customer swipes, taps, dips, or enters a card online, multiple parties are involved in that transaction.

The cost of accepting that payment is called a credit card processing fee.

There are three main parts to every transaction:

1. The issuing bank (the customer’s bank)

2. The card network (Visa, Mastercard, Amex, Discover)

3. The payment processor

Each takes a portion of the transaction.

The 3 Parts of Your Processing Rate

Understanding this breakdown is the key to lowering your costs.

1. Interchange Fees

This is the largest portion of your processing cost.

It goes to the customer’s issuing bank and is set by Visa and Mastercard.

Typical range: 1.5% – 2.3%

Important: Interchange fees are non-negotiable.

2. Card Network Fees

These go directly to Visa and Mastercard for using their payment networks.

Typical range: 0.10% – 0.15%

3. Processor Markup

This is where most businesses overpay.

Your processor adds their own markup on top of interchange and network fees.

Flat-rate companies bundle everything into rates like:

• 2.6% + 10¢

• 2.9% + 30¢

• 3.5% for keyed transactions

The difference between the real cost and what you’re charged is the processor’s profit.

And for many businesses, that profit is excessive.

What Is Your Effective Rate?

Your effective rate is:

Total fees paid ÷ Total monthly processing volume

For example:

If you processed $50,000 last month and paid $1,600 in fees:

$1,600 ÷ $50,000 = 3.2% effective rate

If your effective rate is above 2.5% (depending on card mix), there’s a strong chance you’re overpaying.

Hidden Fees That Add Up Quickly

Many merchant statements include extra fees such as:

• PCI compliance fee

• Non-compliance penalties

• Statement fee

• Batch fee

• Gateway fee

• Regulatory fee

• Annual membership fees

Some are legitimate. Many are inflated or unnecessary.

If you’ve never reviewed your statement closely, you may not even realize they’re there.

How Overpaying Impacts Your Business

Let’s look at a simple example.

If your business processes $75,000 per month:

At 3.2% effective rate = $2,400 per month
At 2.2% effective rate = $1,650 per month

That’s a $750 difference per month.

That’s $9,000 per year.

That’s money that could go toward payroll, marketing, equipment, or profit.

How to Lower Your Credit Card Processing Fees in 2026

Here are proven ways to reduce your merchant service costs:

Switch to Interchange-Plus Pricing

Instead of flat-rate pricing, use:

Interchange + a small transparent markup.

This removes padded bundled pricing and gives you full transparency.

Eliminate Junk Fees

Many unnecessary fees can be reduced or removed entirely with the right provider.

Consider a Cash Discount or Dual Pricing Program

This allows businesses to legally offset processing fees to customers who choose to pay by card.

Many businesses reduce their processing cost significantly using this method.

(Compliance rules vary by state, so proper setup matters.)

Why Businesses Choose NexPay

NexPay helps small businesses lower their credit card processing fees with:

• Transparent interchange-plus pricing

• No long-term contracts

• No hidden junk fees

• Cash discount and dual pricing programs

• Free merchant statement audits

• Support for most POS systems

We work with restaurants, retail stores, gas stations, liquor stores, salons, medical offices, and service businesses nationwide.

Get a Free Merchant Statement Audit

If you’re currently accepting credit cards, there is a strong chance you can reduce your costs.

We’ll review your merchant statement and show you:

• Your true effective rate

• Hidden fees

• Estimated annual savings

• Side-by-side comparison options

There is no obligation and no pressure.

Just clear numbers.

Contact NexPay

Call or Text: 201-800-1715
Email: sales@nexpayusa.com
Website: https://www.nexpayusa.com

Stop overpaying for credit card processing.
Keep more of what you earn.